australian-dollar-bank-notes- AUD
  • Australian Dollar advances for 7th straight session on Chinese economic rebound optimism
  • RBA monetary policy announcement up next
  • US Dollar (USD) demand drops after non-manufacturing PMI storms back into expansion zone
  • Australian Dollar US Dollar (AUD/USD) exchange rate trades 1% higher in July so far.

The Australian Dollar continues its impressive run, rallying 13% since its April lows. The Australian Dollar US Dollar exchange rate rally shows few signs of slowing, climbing 1% so far in July.

At 13:45 UTC, AUD/USD trades +0.5% at US$0.6983, at the top end of the daily traded range.

The risk on mood in the market is boosting the risk sensitive Australian Dollar, whilst dragging on the safe haven US Dollar. Investors are in an upbeat mood as they bet on the Chinese economic rebound sustaining the global economic recovery from the coronavirus crisis. The Aussie Dollar is also known as a proxy for China. Rising Chinese economic optimism often lifts the Australian Dollar.

Risk appetite surged overshadowing a record number of daily coronavirus cases being recorded by the World Health Organisation.

Looking ahead investors will focus on the Reserve Bank of Australia’s monetary policy announcement on Tuesday. Analysts are not expecting the central bank to move on interest rates, which at 0.25% are at the record low. However, with the number of coronavirus cases on the rise in Victoria, and Melbourne, the second largest Australian city back in lockdown, the RBA is expected to strengthen its commitment to more stimulus should it be needed.

The US Dollar is trending lower across the board as investors sell out of the safe haven currency.

Stronger than forecast non-manufacturing PMI showed that the dominant sector in the US economy unexpectedly shot back into expansionary territory in July. The PMI jumped to 57.1, well ahead of last month’s 45.5 and significantly ahead of the 50-level forecast. The level 50 also separates expansion from contraction.

The data has boosted hopes that a V shaped recovery could still be possible. Although, rapidly rising covid-19 cases, particularly across the sunbelt could keep any rapid recovery in check.